What SNF Medical Reviewers Are Denying Now: Lessons from TPE and OIG Audits

Medicare’s medical reviewers and auditors fault SNF claims for two reasons above all others: the medical record does not prove the resident needed daily skilled care, and it does not support the payment code the facility billed. That pattern holds across every review program now touching SNF claims: Targeted Probe and Educate (TPE), the national CERT error-rate sample behind the 2025 National Improper Payment Report, the HHS Office of Inspector General’s (OIG) PDPM audit series, and the Recovery Audit Contractors (RACs), Unified Program Integrity Contractors (UPICs) and Supplemental Medical Review Contractor (SMRC) that round out Medicare’s review contractors.

For executives, the practical question is not whether a reviewer will look at your claims. It is whether your documentation will hold up when one does.

Key Takeaways

SNFs carried an 11.8% Medicare improper payment rate, about $4.3 billion, in the 2025 National Improper Payment Report. That is nearly double the 6.55% program-wide rate.
The leading cause the report identified was unsupported physician-documented active diagnoses and Section GG functional abilities, the items that recur in every reviewer’s findings.
Under TPE, MACs review 20–40 pre-payment claims to identify facilities that may benefit from education. Facilities with a high denial rate may face up to three rounds of pre-payment TPE requests or, without improvement, a potential 100% pre-payment review. TPE targets the facilities that pose the highest risk to the Medicare program.
OIG has opened a series of facility-level PDPM billing audits, with eight projects now active. Its first audit found nearly all of the sampled claims in error, and the recommended refund was extrapolated across the full audit period.
The fix is operational: a program that supports accurate billing from admission, daily skilled-note standards, cert/recert tracking, MDS-to-record reconciliation before billing, a disciplined ADR playbook, and a short list of KPIs the C-suite reviews monthly.

How much do SNF documentation errors cost Medicare?

SNF improper payments totaled roughly $4.3 billion, an 11.8% improper payment rate, in CMS’s 2025 National Improper Payment Report, which covers claims submitted July 1, 2023 through June 30, 2024. CMS named SNFs first among the drivers of program-wide improper payments. The overall Medicare FFS rate was 6.55%, or $28.83 billion.

The trend is improving but the gap is wide. AHCA/NCAL noted the SNF rate fell from 17.2% in the prior report. Before that, the rate jumped from 7.79% in 2021 to 15.1% in 2022, which is what prompted CMS to launch the SNF 5-Claim Probe and Educate review. That probe closed June 30, 2025, and facilities with high probe error rates have been moving into TPE review since. A sector where more than one dollar in nine is paid improperly stays a review priority.

One note on the numbers: a LeadingAge summary of the same release cited roughly 15% and $4.5 billion, likely a narrower service-type cut. This article uses CMS’s provider-type figure.

What are the four recurring SNF denial findings?

1. The record does not prove daily skilled need

Under 42 CFR 409.31, Part A covers SNF care only when the resident needs skilled nursing or rehabilitation daily, for a condition treated in the qualifying hospital stay or arising during the SNF stay, and when that care can only practically be delivered in a SNF. “Daily” means seven days a week for nursing, or at least five days for rehabilitation (409.34). Management and evaluation of the care plan, observation and assessment, and teaching and training can all qualify as skilled, but only when the note shows why a licensed professional’s judgment was required.

Denials arise when notes describe custodial care, when weekend skilled services go undocumented, or when “skilled observation” is a checkbox with no clinical findings behind it.

2. Certification and recertification are missing, late or hollow

42 CFR 424.20 requires a physician certification at admission, a first recertification no later than day 14, and recertifications at least every 30 days after. Each must state the reason for continued care, estimated duration and discharge plans. A statement that care is “medically necessary” is not enough, and facility-employed NPs, CNSs and PAs cannot sign. AAPACN flags a common error: omitting day 1 when counting to day 14. Pandemic-era certification flexibilities have expired and no longer protect claims in current reviews. Because certification is a technical requirement, a missing or defective cert or recert can lead to a full denial of reimbursement, not just a downcoded HIPPS.

3. The HIPPS code is not supported by the chart

Under PDPM the HIPPS code is built from MDS items that drive the PT, OT, SLP, nursing and non-therapy ancillary components. Reviewers do not accept the MDS as proof of itself. They expect the medical record to support the needs and services provided during the look-back period that have been reported on the MDS. When support is missing, auditors downcode the PDPM component represented by the HIPPS. The hot spots are Section GG (how much help the resident needs with mobility and self-care), Section I (active diagnoses, which must be physician- or extender-documented within the last 60 days and treated during the look-back), the comorbidities that add non-therapy ancillary payment, and the swallowing and cognition items that drive the speech component. Physician-documented active diagnoses and Section GG functional abilities are the items the 2025 National Improper Payment Report ranks at the top of its findings. A WPS CERT report gives a concrete example: a claim recoded from HIPPS DAYD1 to CAXD1 because the record did not support Section GG.

4. Other technical and eligibility failures

The rest are avoidable: no qualifying three-day inpatient stay or missing hospital records, missing physician orders, no MDS on file with CMS, or one that generates a different rate than the claim shows, benefit-day exhaustion, missing signature logs, records that do not cover the full stay, and failure to respond to an ADR at all.

Why do SNF documentation denials keep happening?

The root causes are operational, not clerical, which is why they belong on the executive agenda.

- Charting built for care, not proof. Nurses document what they did, not why it required a nurse.
- EHR workflows that invite cloned or checkbox notes that never show daily skilled judgment.
- Interdisciplinary handoff gaps. Therapy documents function one way, nursing another, and Section GG on the MDS often matches neither.
- MDS coordinator overload. One coordinator codes payment-driving items without time to verify the record behind them.
- Dependence on outside physicians for cert/recert, with no system that ensures signatures are obtained timely.
- ADR response treated as a billing task rather than a clinical record assembly with a hard deadline.

CMS is closing the gap from its side. Industry reporting in late 2025 noted that CMS increasingly compares MDS data to clinical records (Skilled Nursing News), and the FY 2027 SNF PPS final rule included a request for information on PDPM “case-mix creep,” signaling that CMS believes coding increases have outrun true acuity. No adjustment was adopted, but the question is now on the record.

Meet daily as an interdisciplinary team. A short daily huddle confirms that the documentation needed to reflect each resident’s acuity is in place during the MDS look-back period, before the assessment locks.
Set a daily skilled-note standard. Every patient in a Part A stay has at least one daily progress note that addresses the patient’s acuity and the nursing needs supporting the continued stay, weekends included.
Develop a cert/recert process. Ensure the certification is obtained at admission, within 14 days of admission, and every 30 days thereafter, and audit content, signer eligibility and dates, not just presence.
Confirm the qualifying hospital stay at or before admission. A qualifying three-day inpatient hospital stay must be verified prior to or at admission; observation days do not count.
Make triple check a pre-bill gate. At this pre-billing meeting, billing, MDS, nursing and therapy confirm that the PDPM HIPPS code components derived from the MDS are supported in the medical record, along with orders, certs, benefit days and repository match, before any claim releases.
Reconcile the MDS to the record. Before submission, verify every payment-driving item against the look-back documentation, with a second reviewer on high-weight items.
Build an ADR playbook. Name an owner, track each request against the 45-day limit in Medicare Program Integrity Manual Chapter 3 (response windows run 15, 30 or 45 days depending on the contractor), and submit a complete record: hospital records, orders, certs, MDS support, skilled notes, therapy records, signature logs, and any other documentation that supports the HIPPS and medical necessity.
Track six KPIs monthly at the executive level. ADR volume and on-time response rate; probe/TPE denial rate by reason; cert/recert timeliness; MDS-to-record reconciliation exceptions; HIPPS changes on review; case-mix index trend versus peers.
Educate on a cadence. Quarterly training built from your own denial letters, plus attendance at every MAC one-on-one session offered.
Strengthen the EHR where it can help. Move to electronic physician signatures, build one document that supports MDS coding of Section GG functional abilities, and provide IDT education that ties documented patient acuity to accurate MDS coding.

What should SNF leadership ask this quarter?

Five questions will tell you whether your organization is audit-ready.

What were our most recent medical review and audit results across all contractor types (TPE, RAC, UPIC, SMRC and OIG), and are any buildings at a denial rate high enough to trigger escalation, such as another TPE round or a 100% pre-payment review?
What share of our Part A days have a dated, compliant cert or recert on file today?
How many HIPPS codes would change if a reviewer audited our last 20 claims?
Do we have a named owner and a deadline tracker for every ADR, recognizing that response windows run 15, 30 or 45 days depending on the contractor?
Has our case-mix index risen faster than peers since PDPM, the kind of data-analytics signal OIG uses to select audit targets?

Frequently asked questions

What is the SNF improper payment rate?

CMS’s 2025 National Improper Payment Report put the SNF improper payment rate at 11.8%, about $4.3 billion, for claims submitted July 2023 through June 2024. The program-wide Medicare FFS rate was 6.55%.

What is the difference between TPE and the SNF 5-Claim Probe and Educate review?

The 5-Claim Probe was a one-time review of five claims from every SNF, run by the MACs from June 2023 to June 2025. TPE is an ongoing program for providers with high error rates: 20–40 pre-payment claims per round, up to three rounds, with education between rounds and referral to CMS, including a possible 100% pre-payment review, if the provider does not improve.

What is the most common reason SNF claims are denied on medical review?

The leading cause identified in the 2025 National Improper Payment Report was unsupported physician-documented active diagnoses and Section GG functional abilities. MAC probe and TPE results add missing or deficient certifications and recertifications, and failure to document daily skilled need.

What does “HIPPS not supported” mean?

The medical record for the assessment reference date and seven-day look-back does not substantiate the MDS items (such as Section GG function scores, Section I diagnoses or NTA conditions) that produced the PDPM payment code. The reviewer corrects the MDS and repays at the lower code.

What is OIG auditing in skilled nursing facilities?

OIG is running a series of facility-level audits of Medicare Part A billing under PDPM. The first, released November 2025, found nearly all of the sampled claims in error and recommended a large refund extrapolated across the audit period. Eight projects are active on OIG’s work plan.

How long does a SNF have to respond to an ADR?

The standard window is 45 days under Medicare Program Integrity Manual Chapter 3. UPIC requests may allow only 15 to 30 days. Non-response is treated as a denial.

Fix the documentation, then get ahead of the next ADR

Every reviewer in this article starts the same way: a request for records with a deadline attached. How your team answers that request decides whether a probe stays a probe or becomes a TPE, an extrapolated demand, or a referral.

Richter’s ADR Management & Support Services give skilled nursing operators end-to-end coverage of that process: pre-audit readiness (checklists, a named response team, and pre-bill signature and documentation protocols), monitoring and complete first-time submission of every ADR, denial management and redetermination appeals, and ongoing education for MDS and interdisciplinary staff on PDPM and documentation standards.

For operators who want to fix the root causes rather than just respond faster, Richter’s Clinical Consulting Services address the upstream work this article describes: clinical process review covering MDS workflow and diagnosis management, integrated clinical and billing compliance audits that cover skilled charting and certification requirements, and EHR optimization so the system supports the documentation standard rather than relying on habit.

To learn more about Richter’s ADR Management & Support Services and Clinical Consulting Services, contact us here or call us at 866.806.0799.